Hot on the heels of Canon’s recent profit announcement, Nikon has cut their full year profit forecast due to lower sales and the strength of the Yen against foreign currencies.

Net income will probably drop 68 percent to 24 billion yen ($267 million) in the 12 months ending March 31 from a year earlier, lower than the 47 billion yen estimate made on Oct. 30, Tokyo-based Nikon said today. Sales may fall 10 percent to 860 billion yen.

Nikon joins its larger rival Canon Inc. in forecasting worsening earnings because of falling digital camera sales amid the global recession. Tokyo-based Canon said on Jan. 28 its net income will probably fall to the lowest in a decade.

Nikon slipped 1.5 percent to close at 924 yen on the Tokyo Stock Exchange before the company reported earnings. The stock lost 73 percent last year, worse than the 42 percent drop for the benchmark Nikkei 225 Stock Average.

The company cut its projection for shipments of high-end single-lens reflex digital cameras this fiscal year by 5.7 percent to 3.3 million units.

Operating profit, or sales minus the cost of goods sold and administrative expenses, will probably decline 67 percent to 44 billion yen in the year ending March, lower than the 82 billion yen October estimate, Nikon said.

Currency Risk

Nikon generates about 75 percent of sales outside Japan. A stronger yen reduces the value of overseas earnings when converted into local currency.

The yen surged 30 percent against the euro and 24 percent versus the dollar in 2008, the best-performing major currency among 16 tracked by Bloomberg.

Canon, the world’s largest camera maker, said last week its camera sales will probably fall 7 percent to 23.9 million units this year. Casio Computer Co., a Japanese maker of cameras and mobile phones, yesterday cut its projection for camera sales this year to 6.2 million units from 7 million.

Global shipments of digital cameras will probably decline 11 percent in the 12 months ending Dec. 31 from an estimated 2.2 trillion yen in 2008, Kazuharu Miura, a Tokyo-based analyst at Daiwa Institute of Research, wrote in a Dec. 25 report.

Nikon posted a third-quarter net loss of 2.3 billion yen, compared with net income of 26 billion yen a year earlier. Operating profit tumbled 98 percent to 800 million yen as sales plunged 20 percent to 213.6 billion yen.

The company said it will cut 800 temporary jobs in Japan in the January-to-March quarter and scale back planned investment to expand immersion scanner production capacity to 20 billion yen over the next three years from 35 billion yen.

Read the full article at Bloomberg.